The proposed study will examine the impact of family and peer contexts on social competence and adolescent substance use. Specifically, this research aims to explore 1} the nature of social competence in adolescence and whether misperceptions in social competence put adolescents at risk for increased substance use, 2) how peer affiliation may increase risk for substance use related to these misperceptions in social competence, and 3) whether particular parenting behaviors are related to the development of misperceptions in social competence and subsequent substance use. Taken together, the aims of this study will extend our knowledge of the contexts in which substance use develops in adolescence. In particular, this study will link disruptions in normative social development (i.e., social competence) with adolescent substance use, addressing a current limitation in the substance use literature. This study will employ observational data of both parent-adolescent and peer-adolescent interactions along with advanced statistical analyses (i.e., SEM) to facilitate a sophisticated examination of the proposed aims. [unreadable] [unreadable] [unreadable]